DCM Shriram: Read About Company’s Diversified Business Portfolio

“The geopolitical risks continue, and the era of low energy and commodity prices may not come back in the near-term. Given these factors, the operating business environment is expected to be challenging. Our businesses have been performing consistently through our economic uncertainties despite the pandemic interrupted years. Our continuous investment in scale, integration, innovation and value creation have limited the negative impact of such volatile operating environments. All our businesses today are self- sustainable and are in investment modes.”
– Ajay Shriram, Chairman and Senior Managing Director

Stock Data

Ticker	DCMSHRIRAM
Exchange	NSE & BSE
Industry	Diversified

Share Price

Last 1 Month	-5%
Last 6 Months	-21%
Last 12 Months	-32%

DCM Shriram’s Diversified Businesses

DCM Shriram Limited (NSE: DCMSHRIRAM) is a diversified Indian conglomerate with interests in agri-business, sugar, and chemicals. The company was established in 1889 and is headquartered in New Delhi, India. DCM Shriram operates across India and has a global presence with manufacturing facilities in Egypt and Kenya.

The company’s agri-business division is engaged in the manufacturing of urea and other fertilizers, seed production, and sale of agri-inputs. DCM Shriram is the second-largest manufacturer of urea in India, with an installed capacity of more than 1.2 million metric tons per annum. The company also produces hybrid seeds and bio-seed products through its subsidiary, Shriram Bio-seed. DCM Shriram has a strong focus on sustainability in its agri-business operations, with initiatives such as crop residue management, soil health programs, and water conservation practices. The company has also developed several high-yielding hybrid seed varieties, catering to the evolving needs of farmers.

DCM Shriram’s farm solutions division is focused on providing comprehensive agricultural solutions to farmers. The division provides agro-equipment, such as tractors, tillers, and other farm machinery, to enhance the efficiency and productivity of farming operations. DCM Shriram’s agro-equipment is designed with cutting-edge technology, ensuring ease of use, durability, and optimal performance.

The company’s chemicals division is engaged in the manufacturing of PVC (polyvinyl chloride) resin, caustic soda, and chlor-alkali products. DCM Shriram is the largest manufacturer of PVC resin in India, with an installed capacity of 272,000 metric tons per annum. The company also produces caustic soda and other chlor-alkali products through its subsidiary, Shriram Alkali and Chemicals. DCM Shriram’s chlor-alkali products find applications across several industries, such as textiles, paper, soap and detergents, and water treatment.

DCM Shriram’s sugar division is involved in the manufacturing of sugar, ethanol, and power. The company operates five sugar mills in Uttar Pradesh and has a total crushing capacity of 36,000 tons of sugarcane per day. The division also produces ethanol and power from sugarcane by-products. DCM Shriram’s sugar mills are equipped with modern technology and automation, enabling it to produce high-quality sugar and by-products.

DCM Shriram’s diversified business model, strong brands, and customer relationships are some of its key strengths, enabling it to navigate the challenges posed by the competitive market environment. The company’s other diversification initiatives includes, the acquisition of Fenesta Building Systems and the establishment of a joint venture with Ajinomoto Group for the production of amino acids.

Q3 FY23 Consolidated Financial Performance

In terms of earnings, Revenue from Operations for Q3 FY23 was ₹ 3,383.65 crore, a 21% increase from ₹ 2,790.78 crore in the same period last year. The Chloro Vinyl (Chemical) division of the company, generated a total of ₹960.11 Crore in revenue, or 28% of the total. This Chemical division fell by 21% from the previous year down to ₹1,042.15 Crore.

The Sugar division accounts for 26% of revenue in Q3 FY23. A total of ₹875.69 Crore were contributed by this division, a sharp incline of 40% from the same quarter last year. The Agri-business division which includes Fertilizer & Bio-seed, reported revenue of ₹652.21 Crore & ₹106.59 Crore. These two combined accounted for the 22% of the overall Revenue. The Farm Solution division contributed a total of ₹511.51 crore, a 15% share in top line. Meanwhile, the Other division contributed the remaining percent.
The Consolidated Net Profit was ₹342.09 crore, slightly down from ₹349.57 crore in the same quarter last year. This quarter’s earnings per share was ₹21.94.

Various Developments In Company’s Divisions

Given higher energy costs and moderation in construction activities, the global capacity utilisation of chlor-alkali in the Chemical division is at a lower level. Except for India, there are no significant capacity additions expected globally in the near future, maintaining the demand/supply balance globally over the medium term. The increase in capacity this year of nearly 1 million tonnes has caused a surplus on the domestic market. Despite the difficulties, DCM Shriram’s plants are running at over 90% of their capacity. The price of caustic soda is under pressure due to a domestic surplus and increased global demand. After crossing $700 per MT in October 2022, import prices dropped to $650 per MT by quarter’s end.

The production and consumption of sugar on a global scale have recently been balanced, with a surplus or deficit of 1 to 2 million tonnes. India now actively participates in international trade flows. The crop appears to be doing well, and the company began crushing operations in November 2022. Additionally, the 120 kilo litres per day distillery and the management’s plans for sugar expansion at Ajbapur and the conversion of Hariawan and Ajbapur plants to refined sugar have successfully been put into operation.

With its leadership position, Shriram Farm Solutions has continued to make progress in the wheat seed market. The company’s emphasis on such scientifically supported seed, plant nutrition, and crop care products, along with a stronger brand and distribution, is advantageous . According to management, plans to produce biologicals and water-soluble fertilisers are currently on track to be operational by Q4 of fiscal year 24.